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China-N. Korea Trade Drops Again

FILE - A man works amid orange robot arms at Rapoo Technology factory in southern Chinese industrial boomtown of Shenzhen. The country's trade with North Korea has slowed for the second consecutive year.

An influential South Korean economic organization says trade and investment between North Korea and China has slid for the second year in a row.

The Beijing bureau of the Korea International Trade Association (KITA) announced Tuesday that North Korean exports to China in the first half of this year amounted to $1.17 billion, a 10.6 percent decline from a year ago. In the same time frame, Chinese exports to North Korea dropped 15.8 percent to $1.33 billion.

KITA attributed the decline to a slump in Chinese economic growth. With lackluster manufacturing activity in the last couple of years, Beijing did not import as many raw materials.

Since the 2000s, demand for raw materials from China has soared in line with its economic development. North Korea took notice of the rising price of raw materials and continuously expanded its export of resources such as anthracite and iron ore to China.

China's slowing economy

Lee Young-hoon, a senior researcher at Seoul's SK Research Institute, told VOA that North Korean export volumes were not to blame for the decrease in trade.

"The unit price of North Korea’s main export items plummeted, as opposed to the amount of exports. That was due to the stagnant Chinese economy and the subsequent fall in the cost of raw materials in the global market," Lee said.

North Korea’s export of anthracite to China in the first half of this year fell 24 percent in value compared to the same period in 2013, when its anthracite exports to that country hit a record high.

The price of anthracite has continued to slide, from an average of $82 per ton in 2014 to $57 per ton last May. The cost of iron ore also fell, resulting in a 70 percent drop in the value of North Korean exports of the material.

Reflection of cooling ties?

China’s exports to the North have also shrunk. China invested a record $110 million in North Korea back in 2012. In just two years, that figure was cut in half.

A Seoul official who preferred to remain anonymous said that while the decline in trade was mainly due to the economic slowdown in China, the investment was also hurt by cooling ties between the two traditional allies. Recently, former U.S. officials said Beijing is frustrated by disputes over North Korea’s nuclear weapons program.

The geopolitical environment was also affecting tourism, with the number of Chinese visitors to the communist country declining for two years in a row.

China and North Korea have not commented on the state of bilateral trade relations.

Jee Abbey Lee contributed to this report, which was produced in collaboration with the VOA Korean service.